Thread by @AnonymousInves7

Vinati Organics- A Niche Speciality Chemical Story!
Vinati Organics is the largest manufacturer of IBB, ATBS in the world with more than 65% global market share in both the products. Now let's look at how can a company command such a staggering market across all products.

The two main products for the company are IBB and ATBS.
IBB- It is the main raw material for Ibuprofen (A generic drug)
ATBS- ATBS has a wide variety of applications across various industries like water treatment chemicals, Adhesives, Textiles.

Product selection Criteria:
The company has a very unique way of selecting its products, each and every product company manufacturers are either acting as an import substitution or either the product is a raw material for an existing product.

The company's journey could be clearly divided into phases wherein the initial phase was controlled by Vinod Saraf, later in 2006 when Vinati Saraf entered the company her first task was to clear the quality issues in ATBS and since then it is the largest revenue contributor.

The company has over the years dominated the IBB market with more than 65% global market share. On the Revenue front, IBB contribution has decreased from 78% in 2006 to 18% currently, mainly because of its low margin. The revenue CAGR for IBB over the last 10 years is around 6%.

The company's market share in ATBS has increased and post 2017 it inc from 45 to 65% when one of its competitors Lubrizol exited the market. It is the highest margin product for the company and the revenue contribution has increased from 20% in 2006 to 50% currently.

On the Revenue front, the CAGR for the last 10 years has been 16%. The company has been able to grow its PAT at a CAGR of 25% over the last 10 years, mainly because of increasing contribution from ATBS, and also because of
the gain in market share increased from 45% to 65%.

The company has been able to generate ROE and ROCE consistently above the cost of capital over the last 15 years, this shows its strength in its operations and also the prudent product selection without compromising on the return ratios.

Company has been expanding its manufacturing capacity without burdening its B/S, complete expansion has been through internal accruals. The fund flow statement shows how prudently the company has met 70% of its funding requirement from internal accruals

Vinati Organics has established a commanding position with strong R&D tie-ups, backwardly integrated operations, reputed clientele. The company has also established strong barriers to entry, so for a new player to enter this industry is a tough nut to crack.

Future product pipeline presents a huge opportunity. For eg Butyl Phenol, currently, total Butyl Phenol is imported in India and the company is setting up a plant that will take care of total imports. So this shows how the company is particular about selecting products.

So, by considering all the above points we can say that Vinati organics qualifies in all the below-mentioned parameters and could be a good diversification in the portfolio given its strong current products and the upcoming products pipeline.

@amey_candor @SamitVartak @safiranand @vinatisaraf @blitzkreigm @sonalbhutra @soicfinance @alphaideas @Gautam__Baid @caniravkaria @abhymurarka